Thai lenders pursue various strategies for presence in AEC
Thailand's major banks have further expanded their networks in the region, especially in Myanmar, in preparation for the upcoming Asean Economic Community (AEC), but with different strategies for tapping these markets.Krungthai Bank and Siam Commercial Bank opened their first representative offices in Myanmar last year, while Kasikornbank will open its first one on Wednesday. Bangkok Bank opened a representative office in Myanmar almost 17 years ago.
All the banks expect the Asean market to contribute more revenue in the near future.
Bangkok Bank, the country's largest, has 26 branches in 13 foreign markets, seven of which are in Asean. Its strategy is to study business opportunities in foreign markets in collaboration with customers to ensure it can support their business needs. This helps the bank design products and services to attract local customers in those markets as well.
It plans to open its third Indonesian branch in Medan soon, and will consider resuming operations in Cambodia.
Bangkok Bank maintains a strong presence in the south of the Asean region even though those markets are not likely to see the rapid growth of the so-called CLMV countries in the north - Cambodia, Laos, Myanmar and Vietnam. According to the bank, Myanmar and Laos have economic-growth rates of 10 per cent, against 5-6 per cent in Indonesia and Malaysia.
However, the bank focuses on Indonesia because it is the biggest economy in Asean. Executive chairman Kosit Panpiamras expects Thai companies to expand their businesses there.
At the same time, Bangkok Bank sees high potential in Myanmar. Having operated a representative office there for 17 years, the bank is ready to provide full services.
Kosit said overseas branches contributed 18 per cent of the bank's revenue, a proportion the bank wanted to maintain, as the AEC would also drive the growth in the domestic economy, particularly in the border provinces.
Krungthai Bank, the Kingdom's second-largest, opened its first representative office in Myanmar last month, so its foreign network now covers three countries in Asean. KTB operates two branches in Cambodia and one in Laos.
KTB sees its role as the "gateway bank" in preparation for the AEC, said chief financial officer Kittiya Todhanakasem. This means it will be able to provide financial transactions to Thai businesses from its branches in border provinces because it has the largest number of branches in those parts of Thailand.
She said KTB's Asean strategy was to follow its existing wholesale customers as they expand into emerging markets including the Greater mekong Subregion (GMS). After that, the bank will look for new customers in those countries, focusing on upper-tier businesses or blue-chip companies that have connections with Thai firms.
KTB plans to open a branch in Vietnam this year.
Kittiya said the bank had no plans to open branches in developed countries in Asean but would utilise its partnerships with local banks instead.
"The banking system in Indochina and the GMS is still developing, which is an opportunity for us. Thai banks can help improve the banking industry over there," she said.
Overseas revenue accounts for 18 per cent of the total, and KTB projects that this proportion will reach 20 per cent in the near future.
Siam Commercial Bank places importance on creating brand awareness in Asean countries because it plans to play the role of a regional bank.
"Everyone should know who we are, whether they are SCB clients or not. The opening of our first representative office in Myanmar in November was a key step in creating SCB's footprint as a regional bank," said executive chairman Vichit Suraphongchai.
SCB's three-year regional expansion plan first focuses on Indochina and the GMS countries. Outside Asean, China is the main focus.
Kasikornbank has no branches in Asean because it supports Thai customers through local partner banks. KBank plans to have representative offices in those countries where investment is high. It has one in Japan and will open a new one in Myanmar on Wednesday.
KBank currently has 35 partner banks in Japan, South Korea, Singapore, Laos, Indonesia, Vietnam, Cambodia, the United States and the European Union.
It sees its role as an Asian bank offering expertise in the regional market to markets abroad. Cooperating with partner banks, foreign government agencies and other partners, KBank says it is able to facilitate overseas business operations significantly for small and medium-sized enterprises that are its clients. This year, the bank intends to engage additional partner banks in Malaysia, the Philippines and Brunei, giving it partnerships in every Asean country.
TMB Bank has one branch in Laos. However, the bank has no plan to set up more branches ahead of the AEC because it does not believe overseas branches would adequately serve Thai customers, said chief executive officer Boontuck Wungcharoen. Instead, it chooses to join with major local bank partners to help Thai enterprises do business in Asean.